Align Technology, Inc. v. SmileDirectClub, LLC

• Court: District Court, N.D. California
• Decided: February 9, 2023
• Docket: 3:23-cv-00023
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ALIGN TECHNOLOGY, INC., Case No. 23-cv-00023-EMC

8 Plaintiff, ORDER GRANTING IN PART AND 9 v. DENYING IN PART MOTIONS TO SEAL 10 SMILEDIRECTCLUB, LLC, et al., Docket Nos. 2, 26 11 Defendants.

12 13 14 Currently pending before the Court are two motions to seal related to the complaint filed 15 by Align. One motion has been filed by Align; the second by Defendants (hereinafter collectively 16 referred to as “SDC”). Although Align originally agreed with SDC that the information at issue 17 should be sealed, it has essentially taken a more neutral position now, leaving it to SDC to argue 18 that the information should be sealed. In accordance with an order issued by Judge Kim (the then- 19 assigned judge), SDC has filed a supplemental brief (Docket No. 33) that identifies what 20 information SDC believes should be sealed and why. The Court hereby GRANTS in part and 21 DENIES in part the request to seal. 22 As an initial matter, the Court provisionally seals the arbitration decision (Exhibit 3 23 attached to the complaint) in its entirety. In so ruling, the Court is not making any final 24 determination as to which parts of the arbitration decision actually warrant sealing. That matter 25 need not be resolved at this point. The entirety of the arbitration decision is not necessary to 26 understand Align’s complaint. 27 As for Align’s complaint, the Court agrees with Judge Kim that there must be compelling 1 No. 29 (Order at 2); see also In re Google Inc. Gmail Litig., No. 13-MD-02430-LHK, 2013 U.S. 2 Dist. LEXIS 138910, at *10-11 (N.D. Cal. Sep. 25, 2013) (noting that “[t]he Ninth Circuit has not 3 explicitly stated the standard – good cause or compelling reasons – that applies to the sealing of a 4 complaint, but this Court and other courts have held that the compelling reasons standard applies 5 because a complaint is the foundation of a lawsuit”); Perez v. Bath & Body Works, LLC, No. 21- 6 cv-05606-BLF, 2022 U.S. Dist. LEXIS 204317, at *3 (N.D. Cal. Nov. 9, 2022) (stating that, 7 “[b]ecause the motion to seal pertains to the complaint, the Court will apply the ‘compelling 8 reasons’ standard”). 9 The Court has reviewed the portions of the complaint that SDC has asked to seal. SDC’s 10 main contention is that the complaint has referenced certain portions of the arbitration decision, 11 but the arbitration decision contains information that “is not true and was not based on a full 12 record or evidence of SmileDirect’s business model.” Docket No. 33-1 (Katzman Decl. ¶ 15). 13 According to SDC, the “false” or “misleading” information “could be used by competitors who 14 otherwise would never have access to SmileDirect’s confidential treatment planning and customer 15 data to disparage SmileDirect and its model,” and the public would be led to “believ[e] something 16 about SmileDirect that is not true, particularly since the text is presented in the context of an 17 arbitration decision attached to a federal court pleading, which gives the information an 18 appearance of inherent credibility.” Docket No. 33-1 (Katzman Decl. ¶ 15); see also Docket No. 19 27 (Opp’n at 19-20) (arguing that “[t]here are statements in the [Arbitration] Decision that are not 20 true and/or are misleading without broader context,” and “[t]he disclosure of these factually 21 inaccurate or misleading statements without context could cause harm to the Company by 22 suggesting things to the marketplace that are not, in fact, the case”). 23 Although the Court is not without any sympathy for SDC’s position, the Court rejects it. It 24 seems unlikely that disclosure of statements from the arbitration decision would lead to improper 25 use of the information for, e.g., “scandalous or libelous purposes.” Pintos v. Pac. Creditors Ass'n, 26 565 F.3d 1106, 1116 n.16 (9th Cir. 2009) (internal quotation marks omitted) (noting that relevant 27 factors to consider in deciding whether there are compelling reasons to seal include “whether 1 purposes”); see also Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1179 (9th Cir. 2006) 2 (stating that “‘compelling reasons’ sufficient to outweigh the public's interest in disclosure and 3 justify sealing court records exist when such ‘court files might have become a vehicle for 4 improper purposes,’ such as the use of records to gratify private spite, promote public scandal, 5 circulate libelous statements, or release trade secrets”). At most, a competitor might cite to the 6 arbitration decision, but nothing prevents SDC from telling the marketplace why the arbitration 7 decision was wrong. And notably, the Ninth Circuit has stated that “[t]he mere fact that the 8 production of records may lead to a litigant's embarrassment, incrimination, or [even] exposure to 9 further litigation will not, without more, compel the court to seal its records.” Id. In Kamakana 10 itself, the Ninth Circuit concluded that the compelling reasons standard was not met even though 11 the defendant-city claimed that disclosure would, e.g., cast police officers in a false light. See id. 12 at 1182. 13 Accordingly, the Court rules as following with respect to the following potions of the 14 complaint: 15 • Portions of ¶ 9 of the complaint. The request to seal is denied. The Court’s general 16 reasoning above applies. The Court also notes that the information at issue is not 17 confidential in the sense that Align’s claim in this case is that there is insufficient 18 dentist/orthodontist involvement in SDC’s processes. 19 • Portions of ¶ 96 of the complaint. The request to seal is denied. See above. 20 • Portions of ¶ 97 of the complaint. The request to seal is granted in part and denied 21 in part. The amount of the payment may be sealed. Otherwise, the sealing request 22 is denied. 23 • Portions of ¶ 98 of the complaint. The request to seal is granted in part and denied 24 in part. The last sentence which provides some specific numbers may be sealed. 25 Otherwise, the sealing request is denied. 26 • Portions of ¶ 99 of the complaint. The request to seal is denied. The Court’s 27 general reasoning above applies. 1 general reasoning above applies. 2 e Portions of § 101 of the complaint. The request to seal is denied. The Court’s 3 general reasoning above applies. 4 e Portions of § 102 of the complaint. The request to seal is denied. The Court’s 5 general reasoning above applies. 6 e Portions of § 103 of the complaint. The request to seal is denied. The Court’s 7 general reasoning above applies. 8 e Portions of § 170 of the complaint. The request to seal is denied. The Court’s 9 general reasoning above applies. 10 e Portions of § 171 of the complaint. The request to seal is denied. The Court’s 11 general reasoning above applies. 12 e Portions of § 172 of the complaint. The request to seal is denied. The Court’s 5 13 general reasoning above applies. 14 e Portions of § 173 of the complaint. The request to seal is denied. The Court’s 3 15 general reasoning above applies. a 16 Align shall file a publicly redacted version of the complaint, consistent with the Court’s 3 17 rulings above, within three court days. 18 This order disposes of Docket Nos. 2 and 26. 19 20 IT IS SO ORDERED. 21 22 Dated: February 9, 2023 23 Eu EDWAR . CHEN 25 United States District Judge 26 27 28